February 3, 2011

DELIVERED VIA E-MAIL TO e-ORI@dol.gov

Office of Regulations and Interpretations

Employee Benefit Security Administration

Attn: Definition of Fiduciary Proposed Rule

Room N-5655

U.S. Department of Labor

200 Constitution Avenue, NW

Washington, DC 20210

RE: Definition of Fiduciary Proposed Rule, 29 CFR §2510.3-21(c)

To Whom It May Concern: 

Fiduciary360 (fi360) 1

General Comments

appreciates the opportunity to comment on the proposal to broaden the 

definition of “fiduciary” under Section 3(21) of the Employee Retirement Income Security Act

(“ERISA”) and the related regulation at 29 CFR §2510.3-21(c). 

Fi360 applauds the Department of Labor on its efforts to provide greater protection for 

retirement plans and their participants and beneficiaries, which is consistent with a broader trend 

in federal securities laws and among professional organizations to expand the definition of 

fiduciary to advisory services where previous application of the standard was fact-specific and 

often ambiguous.

2

 1 Fi360 offers a full circle approach to investment fiduciary education, practice management, and support. 

Our mission is to promote a culture of fiduciary responsibility and improve the decision making processes of 

investment fiduciaries, including investment advisors, managers, and stewards. With legally substantiated Practices 

as our foundation, we offer training, tools, and resources in support of that mission. We also manage the Accredited 

Investment Fiduciary® (AIF®) and Accredited Investment Fiduciary AnalystTM (AIFA®) designation programs. 

AIF designees receive training that provides a unique comprehensive overview of fiduciary standards of excellence, 

asset allocation, preparation of investment policy statements, manager search and due diligence, performance 

measurement, and other related subjects. AIFA designee training builds on that foundation and prepares students to 

provide Fiduciary Assessments to institutions. At present, there are over 4,600 active AIF and AIFA designees. 

In particular, we commend the Department for recognizing the need to update 

2 See Staff of the U.S. Securities and Exchange Commission, “Study on Investment Advisers and BrokerDealers,” January 2011 (“SEC Fiduciary Study”), at http://www.sec.gov/news/studies/2011/913studyfinal.pdf; see 

also Sec. 913, Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), P.L. 111-203

(2010) (requiring the SEC to study the obligations of broker-dealers and investment advisers); Sec. 975(c)(2), 

Dodd-Frank Act, P.L. 111-203 (requiring a fiduciary duty for municipal advisors); CFP Board of Standards, Inc., 

Rules of Conduct, Rule 1.4 (2011), at http://www.cfp.net/Downloads/2010Standards.pdf.
Office of Regulations and Interpretations

February 3, 2011

Page 2

regulations in light of the significant shift to defined contribution plans and the more complex 

investment product and service offerings in the marketplace. We support the Department’s 

proposal to update the definition of “fiduciary” and the advisory relationships that give rise to 

fiduciary duties. Specifically, we believe plans and participants will greatly benefit from the 

Department’s efforts to move from a 5-part test that created limitations related to the 

enforcement of fiduciary obligations, to a more flexible test that covers a greater range of 

investment advice arrangements. 

Although we generally support the Department’s proposal, we believe there are certain areas that 

require further clarification and provide specific recommendations herein for the Department’s 

consideration. 

Application to Investment Advisers (and Brokers)

Under proposed Paragraph (c)(1)(ii)(C), a person would render investment advice if the person is 

“an investment adviser” within the meaning of section 202(a)(11) of the Investment Advisers 

Act of 1940 (“Advisers Act”). We recommend the Department modify this provision to cover 

any person who is registered with the Securities and Exchange Commission (“SEC”) or a state as 

an investment adviser, including individuals affiliated with advisers as “investment adviser 

representatives.”3

 Under the current proposal, it is unclear how this provision is meant to apply

because it only refers to the Advisers Act definition of an investment adviser rather than the 

Advisers Act registration requirements. Thus, given the changing landscape of registration 

requirements under the federal securities laws,4

In addition, as the Department moves forward with its consideration of the definition of 

fiduciary, we recommend it monitor other potential changes under the federal securities laws. As 

previously noted, the SEC recently published the results of its study of broker-dealers and 

investment advisers, and SEC staff made recommendations to expand the application of the 

fiduciary standard of conduct to brokers providing “personalized investment advice.”

we believe it is best to clarify that any person 

registered as an investment adviser (or an investment adviser representative) at the federal or 

state level is covered by the Department’s rule. 

5

 3 See 15 USC 

We 

encourage the Department to review carefully the SEC’s work on fiduciary issues and take its 

findings into consideration as the Department adopts new rules. We would note, however, that 

while we support coordination on fiduciary issues among regulators, we do not believe that the 

Department should delay its plans to finalize new regulations nor should it apply a lesser 

standard of care than currently exists under ERISA. We believe taking prompt action in 

adopting an expanded fiduciary definition will provide greater clarity and enhanced protections 

to plans, participants and beneficiaries. Therefore, we believe the Department should finalize its 

§ 80b-3a(b)(1)(A). 

4 See Sec. 410, Dodd-Frank Act, P.L. 111-203 (raising the threshold for investment advisers required to 

register at the federal level to $100 million assets under management). 

5 SEC Fiduciary Study, supra note 2. 
Office of Regulations and Interpretations

February 3, 2011

Page 3

proposal as soon as practical and consider further modifying its regulations in the future should 

the SEC publish any new guidance or adopt new fiduciary rules. 

Disclosure of Conflicts 

Fi360 supports recommendations made by other commenters6 that more detailed disclosure 

requirements be implemented for the limitation under proposed Paragraphs (c)(2)(i). Under this 

limitation, a person will not be considered a fiduciary if such person can demonstrate that the 

recipient of the advice knows or reasonably should know that the person is in a conflicted 

position and is not undertaking to provide impartial advice. While the burden of compliance and 

proof would be placed on the person providing advice, given the significance of the conflict 

involved, we believe that concrete disclosure requirements are needed. In particular, we 

recommend that the Department require that the advice-provider disclose the conflict of interest 

in writing in clear and conspicuous language, and that the plan fiduciary acknowledge the 

disclosed conflict in writing. As articulated by Assistant Labor Secretary Phyllis Borzi, under 

the proposal, those giving advice on an investment would be considered a fiduciary, while those 

that are only selling their product would not.7

In addition to recommending disclosures for plan fiduciaries, we also recommend that the 

Department clarify that the limitation under proposed Paragraph (c)(2)(i) only applies to advice 

given to plan fiduciaries and is not applicable to participant-level investment advice. We believe 

participants should receive greater fiduciary protections given the important role the advice they 

receive plays in their financial well-being and retirement planning. 

 In order to ensure that plan fiduciaries can 

adequately distinguish between advice and product providers, we believe disclosure controls are 

warranted. 

Definitional Guidance 

As noted by other commenters, the Department has introduced new terms and phrases in the 

proposed rule that have not been clearly defined in previous or current guidance.8

 6 See ASPPA, NAIRPA and CIKR, “Response to Request for Comments on Definition of the Term 

‘Fiduciary’ Proposed Regulation,” January 27, 2011, available at http://www.dol.gov/ebsa/pdf/1210-AB32-063.pdf.

In particular, 

proposed Paragraph (c)(1)(i)(A)(3) refers to advice related to “the management of securities or 

other property,” and proposed Paragraph (c)(1)(ii)(D) refers to advice related to “management 

decisions with respect to plan assets.” As further discussed in the preamble, proposed Paragraph 

(c)(1)(i)(A)(3) would apply to advice and recommendations “as to the selection of persons to 

manage plan assets,” but little other guidance on the terms “management” and “manage” is 

7 See “Labor Department Rule Expands Adviser Responsibility for 401(k) Plans,” Bloomberg, October 21, 

2010, at http://www.bloomberg.com/news/2010-10-21/labor-department-rule-expands-adviser-responsibility-for401-k-plans.html. 

8 See Comment Letter from C. Frederick Reish, Reish & Reicher, January 18, 2011, available at 

http://www.dol.gov/ebsa/pdf/1210-AB32-045.pdf; ASPPA, NAIRPA and CIKR, “Response to Request for 

Comments on Definition of the Term ‘Fiduciary’ Proposed Regulation,” January 27, 2011, available at

http://www.dol.gov/ebsa/pdf/1210-AB32-063.pdf. 
Office of Regulations and Interpretations

February 3, 2011

Page 4

provided. We recommend that the Department provide additional guidance and examples with 

regard to the range of advice and services that would be covered by the phrases “management of 

securities or other property” and “management decisions with respect to plan assets” given that 

these terms do not appear in the current regulation defining “investment advice” and are new 

concepts that plan fiduciaries, participants, beneficiaries and service and advice providers likely 

will struggle to interpret when determining whether fiduciary obligations arise under the 

proposed rule. 

We also believe that the Department should provide additional guidance with regard to advice 

that is “individualized to the needs of the plan, a plan fiduciary, or a participant or beneficiary”

under proposed Paragraph (c)(1)(ii)(D). The current regulation covers “individualized 

investment advice to the plan based on the needs of the plan.”9

In addition, we note that recent initiatives to expand fiduciary obligations to a wider range of 

advice providers under the federal securities laws are focused on circumstances where 

“personalized investment advice” is rendered.

 Comparing the current and 

proposed language, it appears that the proposed rule would cover a broader range of 

individualized advice that considers more than just the needs of the plan as currently required. 

Thus, we recommend the Department further clarify when advice or recommendations would be 

considered to be “individualized” under the proposal.

10 The term “personalized investment advice,” 

however, has not yet been defined under the federal securities laws and related regulations, and 

the SEC is expected to provide guidance on the term’s meaning.11

Plan Distributions

 Again, we do not believe that 

the Department should delay its regulations, but because the terms “individualized” and 

“personalized” may take on similar meaning, we recommend the Department consider any 

guidance issued by the SEC in the future and consider further modifying its regulations if doing 

so would provide greater fiduciary protections to plans, participants and beneficiaries. 

The Department requests comment on whether to extend the proposed rule to encompass 

recommendations related to taking a plan distribution, having taken the position, as a 

general matter, that it should not.12

 9 29 CFR § 2510.3-21(c)(1)(ii)(B)

Fi360 believes that not extending the proposal to plan 

distributions would perpetuate a serious gap in regulation and protection of plan 

10 See Sec. 913(f)-(g), Dodd-Frank Act, P.L. 111-203 (granting the SEC rulemaking authority to adopt rules

establishing a fiduciary duty for broker-dealers and investment advisers who provide personalized investment advice 

to retail investors). 

11 SEC Fiduciary Study, supra note 2, at 123-127 (recommending that the SEC engage in rulemaking and/or 

issue interpretive guidance to explain what it means to provide “personalized investment advice about securities”). 

12 See Definition of the Term “Fiduciary”, 75 Fed. Reg. 65,263, 65,266 (Oct. 22, 2010) (noting that the

Department has taken the position that a recommendation to a plan participant to take an otherwise permissible plan 

distribution does not constitute investment advice under current regulation, even when the advice is combined with a 

recommendation as to how the distribution should be invested). 
Office of Regulations and Interpretations

February 3, 2011

Page 5

participants and beneficiaries, due to uneven standards of care applied to advice-givers 

under other financial services laws.

For example, an insurance producer who provides personalized investment advice to a 

participant or beneficiary as a fiduciary advisor may recommend a rollover or distribution 

following the participant’s or beneficiary’s job change or retirement. There is no 

requirement under state insurance laws, however, for the producer to disclose to the 

participant or beneficiary that the producer is no longer acting solely in their interest

when recommending and executing the rollover or distribution. No state to our 

knowledge requires a producer to act in a fiduciary capacity to the client, and 18 states do 

not even have a suitability requirement in the sale of annuities.13 A recent report by the 

Government Accountability Office (“GAO”) highlights this problem while discussing the 

regulation of financial planners, although the report does not directly address the 

distribution issue. 14

We encourage the Department to examine the GAO report and, at a minimum, consider 

implementing a disclosure requirement for any advisor acting as a fiduciary under ERISA 

who will no longer serve as a fiduciary after distribution. Under such circumstances, the 

advisor should disclose the conflict to the participant or beneficiary in writing and receive 

written acknowledgement of the conflict prior to the distribution or rollover.

 

 13 See U.S. Government Accountability Office, “Regulatory Coverage Generally Exists for Financial 

Planners, but Consumer Protection Issues Remain” (Publication No. GAO-11-235) at 8, January 2011, at

http://www.gao.gov/new.items/d11235.pdf.

14 Id. at 7-12.
Office of Regulations and Interpretations

February 3, 2011

Page 6

Conclusion

We truly appreciate the opportunity to provide our views on these important issues. Please do not 

hesitate to contact us at (412) 221-0292 if you have any questions or would like additional 

information. 

Sincerely, 

Blaine F. Aikin

CEO

Duane Thompson

Senior Policy Analyst

Kristina A. Fausti

Director of Legal and Regulatory Affairs